(Reuters). Asian company earnings are downgraded, according to data. The reason is slowing China’s growth, as well as concerns that high inflation and disruptions in supply chains could impact profits.

Refinitiv’s IBES data estimates that MSCI Asia-Pacific company earnings for the next twelve months were cut by 1.3% over the last month. This is the first downward revision since June 2020.

Alvin So (NYSE:), equity strategist at Goldman Sachs, stated that “We are cautious about the earnings outlook for Asian companies” in a note written this week.

MXAPJ earnings are expected to rise 32% this year and 9.9% in 2022-22-23. These estimates, which is cumulatively 5% lower than top-up consensus of 2023EPS, have risks due to virus impact, China’s policy, disruptions in supply and inflation.

(GRAPHIC: MSCI Asia-Pacific Index’s forward 12-month EPS estimates – https://graphics.reuters.com/ASIA-EPS/zdvxorammpx/chart.png)

Asian companies have seen consecutive earnings increases as analysts predicted that regional firms would surpass the low profits recorded in the first half of 2020 when economies were hard hit by lockdowns.

The base figures for the companies are higher now because most countries have emerged from the lockdown and reported better earnings during the second half last year.

A 2.5% decline was seen in the consumer discretionary industry, but estimates of health care, tech, and materials saw their numbers revised up by more than 1%.

On Tuesday, the International Monetary Fund lowered its forecast of Asia’s economic growth for this year and said that there are downside risks associated with a new wave COVID-19 infection, disruptions to supply chains and rising inflation.

According to ANZ Bank’s report, “Herd immunity (in ASEAN) is at most six months away based on current vaccine roll-out pace”,

(GRAPHIC: Breakdown by sector for estimates changes in last 30 days – https://graphics.reuters.com/ASIA-EPS/klvykzmybvg/chart.png)

Analysts said that central bank monetary tightening would lead to increased borrowing costs by regional banks and shrink their profits.

China’s third quarter saw its economy slowest growth rate in one year, owing to power cuts and property sector wobbles.